There were three salient market movers for the bond market today with one of them being a 2-parter.  

First up was Brexit news in the overnight session.  This began with a compromise deal looking more possible early on.  The result was a move toward higher yields early in the overnight session (compromise + deal = soothing to market uncertainties = bad for bonds).  By the time the sun was up in New York, the British Attorney General had thrown cold water on the deal and bonds were starting to recover.

The recovery was bigger in Europe vs the US and most noticeable in British currency.  US bonds were able to catch up with the rally after weaker-than-expected inflation data (CPI) at 8:30am ET.  This took bonds easily into positive territory where they remained for the rest of the day.

After fairly flat trading through the morning hours, a strong 10yr Treasury auction sent bonds on their next leg of the rally in fairly short order.

All told, yields dropped more than 4bps and Fannie 3.5 MBS gained more than a quarter of a point.  Both sides of the bond market were already close to their best levels in well over a year, and both were already pushing the stronger end of their recent range boundaries. 

The additional gains mean that both MBS and Treasuries are breaking out of those ranges today and will be seeking "confirmation" tomorrow--something that could be facilitated by weaker-than-expected Durable Goods data.  On the other hand, if data is strong and British politicians start talking about compromises, we could see a quick bounce back into the range--just like the one that happened on the other side of the range at the beginning of last week.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
100-20 : +0-09
Treasuries
10 YR
2.6000 : -0.0410
Pricing as of 3/12/19 4:17PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:10PM  :  Strong 10yr Auction Despite Normal Pre-Auction Routine; Bonds Rallying
8:41AM  :  Bonds Recover After Weaker CPI

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "all auction for this most recent leg. Brexit back-and-forth may have helped a bit earlier, but I'm looking at Bunds holding in line with recent lows whereas Treasuries have broken theirs. Now... that's not to say the Treasury demand couldn't be benefiting from Brexit-driven safe-haven buying, but I'd definitely expect Germany to be doing just as well in that case."
Timothy Baron  :  "Been in meetings all morning. What's the scoop on the rally? Brexit news + strong auction?"
Matthew Graham  :  "and with no concession in advance"
Matthew Graham  :  "game on"
Matthew Graham  :  "RTRS - U.S. 9-YR 11-MO NOTES BID-TO-COVER RATIO 2.59, NON-COMP BIDS $10.23 MLN"
Matthew Graham  :  "RTRS - U.S. SELLS $24 BLN 9-YR 11-MO NOTES AT HIGH YIELD 2.615 PCT, AWARDS 78.63 PCT OF BIDS AT HIGH"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Mar 12
8:30 Core CPI (Annual) (%)* Feb +2.1 2.2 2.2
8:30 Consumer Price Index (CPI) (%)* Feb +0.2 0.2 0.0
13:00 10-yr Note Auction (bl)* 24
Wednesday, Mar 13
8:30 Producer Prices (%) Feb 0.2 -0.1
8:30 Core Producer Prices YY (%)* Feb 2.6 2.6
8:30 Durable goods (%)* Jan -0.5 1.2
8:30 Nondefense ex-air (%)* Jan 0.1 -1.0
10:00 Construction spending (%)* Jan 0.4 -0.6
13:00 30-Yr Bond Auction (bl)* 16